Gym membership BIK owner manager

is it better to put through company as BIK or pay personally?

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Hello! 

A client (owner/director of limited co) has asked if they can put their family gym membership of £472 a month through the business as a BIK. 

I generally advise against this but am trying to analyse whether it would be disadvantageous.

They are a BRB tax payer. 

I want to make sure I am not missing anything as I am getting a better answer with BIK than paying personally. Am I comparing like for like? I understand that there will be less profits available to distribute if put through the business and to extract the £472 you would need to extract gross to get that net.

These are the considerations in my calculations:

Put through company: 

They can put through as an allowable staff cost which has a 19% CT deduction but 13.8% Employers NI. The NI itself is CT deductible. 

The director/tax payer pays 20% income tax as BIK. 

Extract and pay personally

No CT deduction but no employers NI. 

19% corporation tax paid on additional profits.

8.75% dividend tax. 

Thank you and please be kind! 

 

 

Replies (7)

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VAT
By Jason Croke
18th Apr 2024 18:41

The family are all employees?

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Replying to Jason Croke:
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By accountinggeek1
18th Apr 2024 18:50

They are not.

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By David Ex
18th Apr 2024 18:55

You’re sure £5,700 pa additional dividend for the gym cost would all be taxed at the 8.75% rate? (And likewise the additional salary tax rate?)

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Replying to David Ex:
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By accountinggeek1
18th Apr 2024 18:58

Yes I am sure

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By Matrix
18th Apr 2024 19:07

I think you are better off taking the dividends and it also uses up less of the BRB.

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By Bobbo
19th Apr 2024 12:13

accountinggeek1 wrote:

A client (owner/director of limited co) has asked if they can put their family gym membership of £472 a month through the business as a BIK. 

Presumably what you meant to say is "A client has asked if they cancel their existing family gym membership which is in their name and have the company contract with the gym for a membership which covers the director and their family, which would be a BIK."

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Bee
By May bee
22nd Apr 2024 10:56

Not much in it but at 19% CT and BR IT, I make it £7,711 of Co profits needed to fund the div route or £8,028 to fund the BIK route. Only done quick calc mind you!

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